How to Choose Bitcoin Wallet?

A bitcoin wallet is a place that stores the digital virtual bitcoin cryptocurrency and validates the transactions when using Bitcoin. A wallet keeps the secret information known as a secret key or seed that is used to sign the transactions so that the bitcoin can be used for the purchase or exchange for another asset. The secret key is also used to validate the transactions, thus this prevents transactions from being altered by a third party.

How Does Bitcoin Wallet work?

A key pair comprising of public key and private key are used to send and receive bitcoins. To send bitcoins private key is used and to receive bitcoins public key is used. Private keys need to be kept secret and public keys can be shared with anyone. 

• A seed is generated when a bitcoin wallet is first created.
• This seed is used to create bitcoin keys that will be required to transmit and receive bitcoin.

If the same public key is used every time bitcoin is received then anyone can track the whole payment history. Thus, treating keys as one-time use tokens increases users’ privacy significantly. 

How to Create a Bitcoin Wallet?

Below are the steps to create a bitcoin wallet:

1. One can create a wallet by signing up in mobile apps, or web apps, for desktop wallets install the application.
2. Once sign-up is complete in mobile apps or web apps you are provided with the public key and private key. The public key is the wallet address and the private key will indicate that you are the owner of this account.
3. The seed phrase is provided for backup in case the wallet address is lost, so keep the seed phrase secret.

One can create as many wallets as one can, but the account will only be visible in the network when a transaction is performed.

Types of Wallet

Below are the different types of bitcoin wallets based on the functionality:

1. Web wallets: Web wallets are hot wallets that are always connected to the internet and can be accessed through different browsers such as Google Chrome, Firefox, and Internet Explorer. For example, Coinbase, and Binance. 
2. Desktop Wallet: Desktop wallets are installable software packs that are available for most desktop operating systems such as Mac, Windows, and Linux.  For example, Electrum, Exodus.
3. Mobile wallet: Mobile wallets are the fourth most secure way to store your cryptocurrencies because they are always connected to the internet (hot wallets) and can be flawed by the development community itself. It is available on both IOS and Android. For example, Jaxx, and Breadwallet.
4. Hardware wallet: These wallets are physical, electronic devices that use a random number generator to generate public keys. The keys are stored in the device itself which is not connected to the internet. Hardware devices are built specifically for handling private keys and public addresses. For example, Ledger, Keepkey, BitLox.
5. Physical/Paper wallet: It is a piece of paper in which address and private keys are physically printed. Needless to say, as it keeps your private keys offline, it is another secure way of storing your cryptos but not all cryptocurrencies offer paper wallets.  For example, the Bitcoin paper wallet generator.

How to Choose Bitcoin Wallet?

There are a number of factors that can be considered to choose a bitcoin wallet. Some of them are:

• Security: This feature enables the first line of defense for the bitcoin wallet in case the device falls into the wrong hand, the wallet can still be protected. Unlocking by PIN is acceptable but it is inconvenient in case the wallet is used regularly. Bitcoin.com Wallet integrates fingerprints and facial recognition in the wallet thus making it easier for frequent users and at the same providing the highest level of security by integrating biometrics in the bitcoin wallet. 
• Private key management: A good wallet should provide facilities for private key management also known as backup features. There may be cases where a user has multiple private keys like the user has more than one wallet, or use has more than one cryptocurrency in the wallet, or if the user has only a private key then also it is a tedious task to keep it a secret. Most people think that the safest way to keep a private key secret is to write on a piece of paper and keep the paper safe someplace. The Bitcoin.com Wallet offers Cloud Backup for private keys. With this feature, the private keys are kept safe in the encrypted form in the cloud and whenever a new wallet is created the key will be automatically backed up to the cloud. 
• Fee customization: Choose a bitcoin wallet that offers preset options like fast, medium, and slow. Where fast means that the transaction will be completed in less time but the user will have to pay a higher fee. Bitcoin.com Wallet allows users to select the precise byte/ satoshi rate for the bitcoin transactions.
• Reputation: It is important to choose a wallet that does not have security flaws. The reputation of the wallet maker is also a very important factor because it might be possible that the wallet has some built-in security flaws. It is better to check for the wallet’s reputation first on the platforms like Bitcoin Reddit, and Bitcoin.com Forum to see what people are saying about the wallet. 
• Access to private keys: If the bitcoin wallet does not give access to the private key then technically the user does not have control over the bitcoin wallet. If the user does not have access to the private key then in that case every time the user wants to do a transaction and use the private key, the user has to seek permission from the custodian of the private key. 
• Multisig wallets: A multi-sig wallet is one where more than one user is required to approve the transaction. Multisig wallets can be helped to improve security. For example, imagine a multi-sig wallet with 4 participants, and 3 of 4 participants are required to approve transactions. It helps to protect the funds if in case one of three people loses their private key.
• Personal notes: A wallet should also provide the option to add a personal note to the transaction. It will be good if there is an option to add tests to transactions to add details like who sent what. when, and where.
• Display Currency: Most wallets allow users to switch the display between the cryptocurrency and the local currency like USD, EUR, etc.
• Developer community: It is better to choose a wallet that has an active developer community for maintenance.
• HD wallet: It is better to choose a bitcoin wallet that generates new addresses itself.

Advantages of Bitcoin Wallet 

1. Decentralized: It means there is no central authority to control the network.
2. Transparency: Since every transaction is stored on the blockchain, in case of any discrepancy one can check the record.
3. International use: One can do Inter-Country transactions very easily because there are no banks involved in this.
4. Low operation cost: When money is transferred from one bank account to another, a considerable amount of money is charged as fees to complete the transaction. If you transfer bitcoin, it will charge very little amount as transaction fees.
5. Instant transfer: Bitcoins are transferred instantly which makes the transaction fast and saves time, irrespective of the geographical location of the sender and receiver.

Disadvantages of Bitcoin Wallet 

1. Universal Acceptance: Bitcoins are not accepted worldwide, in some countries, it’s not legal tender.
2. Price fluctuation: The price of bitcoins fluctuates very much, as it is influenced by investor and user sentiments, government regulations, supply, and demand, etc.
3. Keeping the seed phrase secret: If you don’t keep the phrase secure, the security of the account can be compromised
4. Reversing the payment: If you mistakenly pay someone by using bitcoins, then there is no way to get a refund of the amount paid. All you can do is to ask the person for a refund and if your request is turned down, then just forget about the money.